Questions and Answers of Financial Accounting Tool

The Palpatine Hotel opened for business on May 1, 2001. Here is its trial balance before adjustment on May 31:Other data:1. Insurance expires at the rate of $200 per month.2. An inventory of supplies
Yoda Inc. was organized on July 1, 2001. Quarterly financial statements are prepared. The trial balance and adjusted trial balance on September 30 are shown here:Instructions (a) Journalize the
A review of the ledger of Ewoks Company at December 31, 2001, produces these data pertaining to the preparation of annual adjusting entries:1. Prepaid Insurance $12,300: The company has separate
On November 1, 2001, the following were the account balances of Naboo Equipment Repair:During November the following summary transactions were completed:Nov. 8 _ Paid $1,100 for salaries due
Brett Farve opened Corellian Window Washing Inc. on July 1, 2001. During July the following transactions were completed.July 1 Issued $9,000 of common stock for $9,000 cash.1 Purchased used truck for
Presented here are the assumptions, principles, and constraints used in this and previous chapters:1. Economic entity assumption. 6. Revenue recognition principle.2. Materiality. 7. Full disclosure
Julie Brown started her own consulting firm, Astromech Consulting, on May 1, 2001.The trial balance at May 31 is as follows:In addition to those accounts listed on the trial balance, the chart of
Obi-Wan Resort opened for business on June 1 with eight air-conditioned units.Its trial balance before adjustment on August 31 is presented here:Other data:1. Insurance expires at the rate of $300
R2-D2 Advertising Agency was founded by Thomas Grant in January 1997. Presented here are both the adjusted and unadjusted trial balances as of December 31, 2001.Instructions (a) Journalize the annual
A review of the ledger of Greenberg Company at December 31, 2001, produces the following data pertaining to the preparation of annual adjusting entries:1. Salaries Payable $0: There are eight
On September 1, 2001, the following were the account balances of Rijo Equipment Repair:During September the following summary transactions were completed:Sept. 8 Paid $1,100 for salaries due
Ewok-Ackbar opened Ewok’s Carpet Cleaners on March 1. During March, the following transactions were completed.Mar. 1 Issued $10,000 of common stock for $10,000 cash.1 Purchased used truck for
The financial statements of Tootsie Roll are presented i in Appendix ‘ at tthe ‘end of this book. a Instructions apie Hae(a) Using the consolidated income statement and balance sheet, identity
The financial statements of Hershey Foods are presented in Appendix B; ‘following the financial statements for Tootsie Roll in Append A. ie May, Footsie [hiae. Roll ge Instructions . ae(a) Identify
The March 1995 issue of Management Review includes an article by Barbara Ettorre entitled “How Motorola Closes Its Books in Two Days.”Instructions Read the article and answer the following
Case Corporation, based in Racine, Wisconsin, manufactures farm tractors, farm equipment, and light- and medium-sized construction equipment. The company’s products are distributed through both
Hoescht Marion Roussel (HMR) is one of the world’s largest research-based pharmaceutical companies. It is headquartered in Frankfurt, Germany. It conducts research in Germany, France, and the
Purpose: Using “Edgar Database” to locate and identify common corporate filings required by the SEC forms and their definitions.Address: http://www.sec.gov/index.htmI (or go to
Holiday Travel Court was organized on April 1, 2000, by Alice Adare. Alice is a good manager but a poor accountant. From the trial balance prepared by a part-time bookkeeper, Alice prepared the
On numerous occasions proposals have surfaced to put the federal government on the accrual basis of accounting. This is no small issue because if this basis were used, it would mean that billions in
Prepare the journal entries to record the following transactions on H. Hunt Company’s books using a perpetual inventory system.(a) On March 2 H. Hunt Company sold $900,000 of merchandise to B.
A. Cosby Company provides this information for the month ended October 31, 2001: sales on credit $300,000; cash sales $100,000; sales discounts $5,000; and sales returns and allowances $20,000.
The following transactions are for Pippen Company:1. On December 3 Pippen Company sold $480,000 of merchandise to Barkley Co., terms 2/10, n/30. The cost of the merchandise sold was $320,000.2. On
On September 1 College Office Supply had an inventory of 30 deluxe pocket calculators at a cost of $20 each. The company uses a perpetual inventory system. During September these transactions
This information relates to Hans Olaf Co.:1. On April 5 purchased merchandise from D. DeVito Company for $18,000, terms 2/10, n/30.2. On April 6 paid freight costs of $900 on merchandise purchased
On June 10 Arcadian Company purchased $6,000 of merchandise from Duvall Company, terms 2/10, n/30. Arcadian pays the freight costs of $300 on June 11. Damaged goods totaling $300 are returned to
Presented is information related to Gonzales Co. for the month of January 2001:Instructions (a) Prepare an income statement using the format presented on page 220. Operating expenses should not be
Financial information is presented here for two companies:Instructions (a) Fill in the missing amounts. Show all computations.(b) Calculate the profit margin ratio, gross profit rate, and operating
In its income statement for the year ended December 31, 2001, Violin Company reported the following condensed data:Instructions (a) Prepare a multiple-step income statement.(b) Calculate the profit
The adjusted trial balance of Cecilie Company shows these data pertaining to sales at the end of its fiscal year, October 31, 2001: Sales $900,000; Freight-out $12,000; Sales Problems: Set A 231
Hummingbird Hardware Store completed the following merchandising transactions in the month of May. At the beginning of May, Hummingbird’s ledger showed Cash of $5,000 and Common Stock of $5,000.May
Dazzle Book Warehouse distributes hardback books to retail stores and extends credit terms of 2/10, n/30 to all of its customers. During the month of June the following merchandising transactions
Rowbuck Department Store is located in midtown Metropolis. During the past several years, net income has been declining because suburban shopping centers have been attracting business away from city
At the beginning of the current season on April 1, the ledger of Watry’s Pro Shop showed Cash $2,500; Merchandise Inventory $3,500; and Common Stock $6,000. The following transactions were
An inexperienced accountant prepared this condensed income statement for Horizon Company, a retail firm that has been in business for a number of years.As an experienced, knowledgeable accountant,
The trial balance of A-Whole-Lot-of-Stuff Wholesale Company contained the acadjusted trial balance and counts shown at December 31, the end of the company’s fiscal year:Adjustment data:1.
Maggie Zine Distributing Company completed these merchandising transactions in the month of April. At the beginning of April, the ledger of Maggie Zine showed Cash of $9,000 and Common Stock of
Travel Warehouse distributes suitcases to retail stores and extends credit terms of 1/10, n/30 to all of its customers. During the month of July the following merchandising transactions occurred.July
Al Falfa Department Store is located near the Village Shopping Mall. At the end of the company’s fiscal year on December 31, 2001, the following accounts appeared in its adjusted trial
At the beginning of the current season, the ledger of Star-Struck Tennis Shop trial balance and partial showed Cash $2,500; Merchandise Inventory $1,700; and Common Stock $4,200. The folincome
A part-time bookkeeper prepared this income statement for Sima Nan Company for the year ending December 31, 2001:As an experienced, knowledgeable accountant, you review the statement and determine
The trial balance of Shakira Fashion Center contained the following accounts at November 30, the end of the company’s fiscal year:Adjustment data:1. Store supplies on hand total $3,500.2.
What does Apple use as the estimated useful life on its buildings? On its machinery and equipment? (Hint: You will need to find the notes to Apple's financial statements online. See the directions
Additions to plant assets are:(a) revenue expenditures.(b) debited to the Repairs and Maintenance Expense account.(c) debited to the Purchases account.(d) capital expenditures.
O A company would minimize its depreciation expense in the first year of owning an asset if it used:(a) a high estimated life, a high salvage value, and declining-balance depreciation.(b) a low
Able Towing Company purchased a tow truck for $\$ 60,000$ on January 1, 2017. It was originally depreciated on a straight-line basis over 10 years with an assumed salvage value of $\$ 12,000$. On
Pierce Company incurred $\$ 150,000$ of research and development costs in its laboratory to develop a new product. It spent $\$ 20,000$ in legal fees for a patent granted on January 2, 2017. On
Lake Coffee Company reported net sales of $\$ 180,000$, (L0 5) net income of $\$ 54,000$, beginning total assets of $\$ 200,000$, and ending total assets of $\$ 300,000$. What was the
Kant Enterprises purchased a truck for $\$ 11,000$ on January 1, 2016. The truck will have an estimated salvage value of $\$ 1,000$ at the end of 5 years. If you use the units-of-activity method,
Jefferson Company purchased a piece of equipment (LO 6) on January 1, 2017. The equipment cost $\$ 60,000$ and has an estimated life of 8 years and a salvage value of $\$ 8,000$. What was the
Hummer Company purchased a delivery truck. The total ¢ash payment was$30, 020, including the following items.Explain how each of these costs would be accounted for. Negotiated purchase price $24,000
On January 1, 2017, Salt Creek Country Club purchased a new riding mower for $\$ 15,000$. The mower is expected to have a 10 -year life with a $\$ 1,000$ salvage value. What journal entry would
Fordon Corporation purchased a piece of equipment for $\$ 50,000$. It estimated an 8 -year life and $\$ 2,000$ salvage value. At the end of year four (before the depreciation adjustment), it
Match the statement with the term most directly associated with it.Goodwill Amortization Intangible assets Franchise Research and development costs A. $\qquad$ Rights, privileges, and competitive
The following expenditures relating to plant assets were made by Glenn Company during the first 2 months of 2017. 1.Paid $7,000 of accrued taxes at the time the plant site was acquired. 2.Paid $200
The following situations are independent of one another.A. An accounting student recently employed by a small company doesn’t understand why the company is only depreciating its buildings and
The financial statements of Apple Inc. are presented in Appendix A. Instructions efor accessing and using the company’s complete annual report, including the notes to the financial statements, are
The March 29, 2012, edition of the Wall Street Journal Online contains an article Eby Miguel Bustillo entitled, “Best Buy Forced to Rethink Big Box.” The article explains how the 1,100 giant
Purpose: Use an annual report to identify a company’s plant assets and the depre- AN ciation method used.Address: www.annualreports.com Steps 1.Select a particular company. 2.Search by company
Clean Aire Anti-Pollution Company is suffering declining sales of its principal product, nonbiodegradable plastic cartons. The president, Wade Truman, instructs his controller, Kate Rollins, to
company’s tradename is a very important asset to the company, as it creates immediate product identification. Companies invest substantial sums to ensure that their product is well-known to the
The financial statements of Louis Vuitton are presented in Appendix F. Instructions for accessing and using the company’s complete annual report, including the notes to its financial statements,
If a $6 \%, 10$-year, $\$ 800,000$ bond is issued at face value and interest is paid annually, what is the amount of the interest payment at the end of the first period?
$\mathrm{C}$(a) In general, what are the requirements for the financial statement presentation of long-term liabilities?(b) What ratios may be computed to evaluate a company's liquidity and
The management of Ingolls Corporation is concerned because survey data suggest that many potential customers do not buy vehicles due to quality concerns. It is considering taking the bold step of
Mays need his business. He is considering buying the trucks but is concerned that the additional debt he will need to incur will make his liquidity and solvency ratios look bad. What options does he
Oars What are the implications for analysis if a company has significant operating leases?
O-at what criteria must be met before a contingency must be recorded as a liability? How should the contingency be disclosed if the criteria are not met?
Osmad Explain the straight-line method of amortizing discount and premium on bonds payable.
Honore Draper is discussing the advantages of the effective-interest method of bond amortization with her accounting staff. What do you think Honore is saying?
To be classified as a current liability, a debt must be expected to be paid within:(a) 1 year.(b) the operating cycle.(c) 2 years.(d) (a) or (b), whichever is longer.
Ottman Company borrows $\$ 88,500$ on September 1, 2017, from Farley State Bank by signing an $\$ 88,500$, $12 \%$, 1-year note. What is the accrued interest at December 31, 2017?(a) \(\$
Alexis Company has total proceeds from sales of $\$ 4,515$. If the proceeds include sales taxes of $5 \%$, what is the amount to be credited to Sales Revenue?(a) $\$ 4,000$.(c) \(\$
When recording payroll:\[ \begin{aligned} & \text { (a) gross earnings are recorded as salaries and wages } \\ & \text { payable. } \\ & \text { (b) net pay is recorded as salaries and wages
O-- In a recent year, Derek Corporation had net income of $\$ 150,000$, interest expense of $\$ 30,000$, and income tax expense of $\$ 20,000$. What was Derek Corporation's times interest
Which of the following is not a measure of liquidity?(a) Debt to assets ratio.(b) Working capital.(c) Current ratio.(d) Current cash debt coverage.
For the bonds issued in Question 17, what is the car- $\{10$ rying value of the bonds at the end of the third interest period?(a) $\$ 492,000$.(c) $\$ 472,000$.(b) $\$ 488,000$.(d) \(\$
Andrews Inc, issues a $\$ 497,000,10 \% 3$-year mortgage note on January 1. The note will be paid in three annual installments of $\$ 200,000$, each payable at the end of the year. What is the
Howard Corporation issued a 20-year mortgage note (10) payable on January 1, 2017. At December 31, 2017, the unpaid principal balance will be reported as:(a) a current liability.(b) a long-term
Data for Betsy Strand are presented in BE10-5. Prepare the employer's journal entries to record (a) Betsy's pay for the period and (b) the payment of Betsy's wages. Use January 15 for the end of the
Data for Betsy Strand are presented in BE10-5. Prepare the employer's journal entry to record payroll taxes for the period. Ignore unemployment taxes.
Presented here are long-term liability items for Stevens Inc. at December 31, 2017. Prepare the long-term liabilities section of the balance sheet for Stevens Inc.Bonds payable (due 2021)Notes
Suppose the 2017 adidas financial statements contain the following selected data (in millions).Compute the following values and provide a brief interpretation of each.(a) Working capital.(c) Debt to
Suppose the Canadian National Railway Company's (CN) total assets in a recent year were $\$ 24,004$ million and its total liabilities were $\$ 14,180$ million. That year, $\mathrm{CN}$ reported
Presented below is the partial bond discount amortization schedule for Rohr Corp., which uses the effective-interest method of amortization.\section*{Instructions}(a) Prepare the journal entry to
You and several classmates are studying for the next accounting examination. They ask you to answer the following questions:1. If cash is borrowed on a $\$ 60,000,9$-month, $10 \%$ note on August
During the month of February, Hennesey Corporation's emplovees earned wages of $\$ 74,000$. Withholdings related to these wages were $\$ 5,661$ for Social Security (FICA) , $\$ 7,100$ for
State whether each of the following statements is true or false.1. Convertible bonds are also known as callable bonds.2. The market rate is the rate investors demand for loaning funds.3. Semiannual
Smiley Corporation issues $\$ 300,000$ of bonds for $\$ 315,000$. (a) Prepare the journal entry to record the issuance of the bonds, and (b) show how the bonds would be reported on the balance
Farmland Corporation issued $\$ 400,000$ of 10 -year bonds at a discount. Prior to maturity, when the carrying value of the bonds was $\$ 388,000$, the company redeemed the bonds at 99 . Prepare
On June 1, Marchon Company Ltd. borrows $\$ 60,000$ from Acme Bank on a 6-month, $\$ 60,000,8 \%$ note. The note matures on December 1 .\section*{Instructions}(a) Prepare the entry on June 1.(b)
On August 1, 2017, Gonzaga Corporation issued $\$ 600,000,7 \%, 10$-year bonds at face value. Interest is payable annually on August 1. Gonzaga's year-end is December
On January 1, Kirkland Company issued $\$ 300,000,8 \%, 10$-year bonds at face value. Interest is payable annually on January 1.\section*{Instructions}Prepare journal entries to record the
Arroyo Company issued $\$ 600,000,10$-year, $6 \%$ bonds at 103 .\section*{Instructions}(a) Prepare the journal entry to record the sale of these bonds on January 1, 2017.(b) Suppose the
Mobbe Company issued $\$ 500,000,15$-year, $7 \%$ bonds at 96 .\section*{Instructions}(a) Prepare the journal entry to record the sale of these bonds on January 1, 2017.(b) Suppose the remaining
Assume that the following are independent situations recently reported in the Wall Street Journal.1. General Electric (GE) $7 \%$ bonds, maturing January 28,2018 , were issued at 111.12 .2. Boeing
The situations presented here are independent of each other}\section*{Instructions}For each situation, prepare the appropriate journal entry for the redemption of the bonds.(a) Mikhail Corporation
Suppose McDonald's 2017 financial statements contain the following selected data (in millions).Instructions (a) Compute the following values and provide a brief interpretation of each.(1) Working
Suppose 3M Company reported the following financial data for 2017 and 2016(in millions).Instructions (a) Calculate the current ratio for 3M for 2017 and 2016.(b) Suppose that at the end of 2017, 3M
Underwood Boutique reported the following financial data for 2017 and 2016.Instructions (a) Calculate the current ratio for Underwood Boutique for 2017 and 2016.(b) Suppose that at the end of 2017,

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